“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Friday, February 25, 2011

Why Do State & Local Government Directly Employ So Many Workers?

Amidst all the trouble being caused by teachers and other state and local workers in New Jersey, Wisconsin, and Ohio, I've been wondering just why local and state governments directly employ so many workers?

Let's start with a small, local example- your town's parks and recreation department. I understand hiring a director for the function- sort of. Ideally, a committee of town council members could oversee the function, or one manager could handle several functions. So let's assume that this function, along with a few others, is managed by a managerial-level town employee who is not unionized.

Why would any town want to hire and be responsible for managing and paying the people in a function like this? It's essentially doing landscaping and outdoor maintenance work for the town's properties. So why not just contract with as many local such firms as necessary to perform the work? Bidding such work out to existing firms should get the town something approaching the marginal cost for such work, without incurring headaches involved with actually managing and paying the workers involved. No strikes, no compensation negotiations. And the town would have the advantage of routinely rebidding contracts, not to mention having recourse for work not performed, or poorly performed.

The same could be said with more local functions, such as school staffs, waste treatment plants, etc. If one didn't already have the precedent of existing school staffs, unions and such, why would a town or district bother with hiring anyone below a superintendent of schools? As a town official, I'd much rather outsource teaching to either individually-hired teachers, or a company which supplied whole school teaching and administrative staffs. Prices for the contract could be set relative to student performances, while the town remained free of long term liabilities for benefits paid to the staffs. That would be the concern of the providing company.

About  the only state or local function you might not want outsourced would be the police function, due to their use of force to compel citizens' compliance. Firefighting isn't really all that special, once prices reflect the risks of the work. As with schools, the actual buildings would be built and owned by the town.

By avoiding direct employment of many workers, local and state governments would accomplish several things. First, they'd always be able to solicit the best, most productive solutions from competing bidders for their work. Second, without dedicated employees, redesign of processes, departments, etc., would be much easier, because the government wouldn't directly employ the affected workers.

Third, workers doing government jobs, via contracts, would have the same risks everyone else does regarding employment, yet enjoy private sector labor markets and prices.

Aside from giving state and local government employees special benefits by being employed directly by government, what is the real value of this arrangement? It's fine to have higher-level managers of functions employed by the government, but, lower than that, it would make sense to have citizens' tax dollars used to spend on the best among competing solutions, rather than provide cozy long term employment for those fortunate enough to secure such a job.

What's gone on in New Jersey for over a year and, more recently, in Wisconsin and Ohio makes me think about this topic a lot.

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